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Would You Buy India's $35 Tablet Computer?

Why spend $500 on an iPad if India's got a tablet for $35?

News reached us last week that India's government has an ambitious project under way to build and offer a functional tablet computing device for just $35. The Western world was quick to question India's ability to build the device, especially since a previously announced $10 PC did not materialize. This new project has already a mockup and is seeking manufacturer interest. Would you buy it?

The prototype mockup shown hints to a touchscreen, no hard drive, storage based on memory cards, as well as power that is supplied via solar cells. There has been no information on which processor it uses, how much RAM it integrates, and what operating system it runs, albeit it is almost certain that it is some variation of Linux. In terms of the processor, a version of ARM's chips is likely. However, Intel(Nasdaq: INTC) may be able to compete due to the sheer market opportunity. While its Atom processors sell for a tray price of at least $29, Intel has been rumored to produce an Atom chip for less than $4 these days. Given the size of the Indian market, Intel may be willing to discuss a discount.

So, would buy this tablet, which is priced in the neighborhood of a dinner in a decent restaurant here in the U.S.? Or would you go for an iPad for well north of $500 (the average selling price is $695, according to Apple(Nasdaq: AAPL)), or a cheaper tablet for $200 such as the Pandigital Novel, based on what you know now?

Perhaps that isn't the right question. Let me rephrase it: Since you won't be able to purchase it in the U.S. anyway, would you buy it if you lived in India? With some research, you might be tempted to agree and say that you are definitely interested. Here's why.

India's population currently stands at about 1.14 billion people. According to the Telecom Regulatory Authority of India, 81 million of them, or 7%, access the Internet today via wired or wireless means. Only 9.45 million, or 0.8%, have a broadband connection to the Internet, which shows that access to the Internet is a true privilege in India today. In comparison, according to Nielsen, 74.1% of U.S. Americans access the Internet today and about 37% browse via a broadband connection. While there surely is still a digital divide in the U.S., Internet access is far more obtainable on these shores than it is in India today.

One of the reasons why there are not more wired broadband connections in India, which could enable Internet access via DSL or cable, is because there aren't many wireline connections. According to the Telecom Regulatory Authority of India, there are only 36.2 million wired phone connections at this time in India. That has to do with the increasing popularity of cell phones, but also the fact that there is no phone connectivity in many rural areas. Also, traditional PCs are either not affordable for the population or simply do not make sense and prevent a greater Internet penetration. For example, about five years ago, Intel unveiled a "bug PC" concept for developing countries, which had a casing that was critter-safe and a PSU that could be connected to a car battery, which often is the only available power source for electrical devices.

On the other hand, India's population is growing up on wireless communications, much more than we did and still do here in the U.S. According to the Telecom Regulatory Authority of India, there are currently 635.5 million active cell phone subscribers in India, translating into a market penetration of 54%. However, not many of those users access the Internet via a smartphone as those devices are extremely expensive. Consider the annual per capita income of $1039 per year and then the local price for an iPhone 3G S of $725, the Samsung Galaxy S of $597, the Sony Ericsson Xperia X10 of $660, the Nokia N97 of $480 or the Blackberry Storm 2 of about $680. Would you spend half of your annual income (which is, on average, $46,381 in the U.S.) on a smartphone to be able to access the Internet? Probably not. But what about 3% (or the equivalent of about $1575 based on average U.S. per capita income)? That sounds a lot more likely. Of course, we do not know what kind of wireless connectivity the $35 tablet device will have, but WiFi may suffice for educational purposes or local community Internet access points. Down the road, WiMax may be an option. Suddenly, the solar-powered $35 tablet makes a lot of sense -- in India.

You may still be criticizing the lack of local storage space, but remember, India's population grows up with cell phones that do not have local storage. Explaining the cloud and its features, and building a compelling case around it, is a lot easier in India than it is in the U.S. or other developed nations, where we are used to virtually never ending storage capacity on our computers. You can't miss what you don't know.

Here in the U.S., we are told that OLPC will be aiming for a $99 computer, which follows the original $100 laptop that turned out to be a $190 laptop. Even if it will materialize, $100 may be too much for what the Indian government tries to achieve. Of course, we do not know if $35 is realistic, and we are skeptic that the stated $20 and $10 goals can be achieved in the future. But we should respect India's repeated attempts to come up with an affordable computer for its population. It is rather arrogant to be sitting here in the U.S., comparing it to the iPad, questioning its features and raising doubt whether it can be built for that price target. A $35 tablet is what could propel the country into the Internet age.